Projected FY 2006 State and Local Tax Collections
This week we published an Issue Brief reporting the latest state and local tax collection data for FY 2005. In a recent blog entry, I noted that the Census Bureau shows a dramatic increase in state tax collections for FY 2006. In fact, the nominal increase of $519,173,000 is the largest one year increase since FY 1950–even after adjusting for inflation. This begs the question: Can we estimate the level of state AND local taxation for FY 2006?
As it turns out, yes we can make an estimate for FY 2006. We have the state data from Census and the personal income data from the Bureau of Economic Analysis. All that is needed is an estimate for local taxes. That estimate comes to us via a report published on the State Planning Office’s website titled “LD 1 Progress Report in 2006.” The report finds growth in local property tax commitments of 3.9 percent.
After plugging in these numbers, the Chart below reveals a very disturbing outcome. Based on this data, Maine’s level of state and local taxation will reach a new all-time high of 13.97 percent of personal income, just edging out the previous high set in FY 1998 of 13.95 percent. This will also represent the second largest percentage point increase since FY 1950 with an increase of almost 1 full percentage point.
Please keep in mind that this is a projection. The Bureau of Economic Analysis will be revising Maine’s income numbers in September and the local property tax data is based on estimates from the State Planning Office which may differ from the official Census Bureau data. That being said, Mainer’s should brace themselves for some really bad news on FY 2006’s level of state and local taxation.